Correlation Between Levi Strauss and Pandora AS

Can any of the company-specific risk be diversified away by investing in both Levi Strauss and Pandora AS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Levi Strauss and Pandora AS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Levi Strauss Co and Pandora AS, you can compare the effects of market volatilities on Levi Strauss and Pandora AS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Levi Strauss with a short position of Pandora AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Levi Strauss and Pandora AS.

Diversification Opportunities for Levi Strauss and Pandora AS

0.16

Correlation Coefficient

Levi Strauss  Pandora AS

Average diversification

The 3 months correlation between Levi and Pandora is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Levi Strauss Co and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora AS and Levi Strauss is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Levi Strauss Co are associated (or correlated) with Pandora AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora AS has no effect on the direction of Levi Strauss i.e., Levi Strauss and Pandora AS go up and down completely randomly.

Pair Corralation between Levi Strauss and Pandora AS

Given the investment horizon of 90 days Levi Strauss Co is expected to under-perform the Pandora AS. In addition to that, Levi Strauss is 1.26 times more volatile than Pandora AS. It trades about -0.06 of its total potential returns per unit of risk. Pandora AS is currently generating about -0.03 per unit of volatility. If you would invest  117,900  in Pandora AS on September 3, 2024 and sell it today you would lose (4,250) from holding Pandora AS or give up 3.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Levi Strauss Co  vs.  Pandora AS

Levi Strauss

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Levi Strauss Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pandora AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pandora AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Pandora AS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Levi Strauss and Pandora AS

The main advantage of trading using opposite Levi Strauss and Pandora AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Levi Strauss position performs unexpectedly, Pandora AS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pandora AS will offset losses from the drop in Pandora AS's long position.

The idea behind Levi Strauss Co and Pandora AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.